Onsumers' Needs Are the Engine of Business for Smartphone Producer

COVER STORY • Digital Technology Will Create a New World After the Global Spread of Covid-19 • 4 Interview with Sean Deng, CEO of OPPO Japan onsumers’ Needs Are the Engine of Business for Smartphone Producer OPPO Japan CBy Japan SPOTLIGHT OPPO, a leading smart device brand that originated in China in 2004 and has expanded to more than 40 countries, is a good representative of Asian digital business. OPPO Japan, in particular, has been stimulating Japanese consumers’ interest since its founding in 2017 with smartphones like the R11S with its highly advanced technology for taking photos, as well as the OPPO Reno A to meet the increasing need for cashless payments among the Japanese. Sean Deng, CEO of OPPO Japan, kindly responded to our questions in the interview below. (Interviewed on March 4, 2020) Self-Introduction whole of Southeast Asia. Then in terms of a one-stop e-commerce solution and enabler JS: First, could you please briefly arm, we have Jet Commerce which is an introduce yourself? agent for online business across various platforms targeting various groups of Deng: I myself joined in developing the consumers. Then we have OASE which is also Indonesian market for OPPO in 2011, and I an accessories arm, in terms of general was appointed the managing director of consumer products. We have seven main OPPO Indonesia when it was established in business groups in Southeast Asia currently. 2013. In Indonesia, I worked on expanding Why or how we can develop such a huge the sales channels such as major chain stores business group is because of our unique and management, and I succeeded in having corporate structure. We like to be seen as a all of the chain stores in Indonesia sell OPPO bunch of business partners who work jointly products. I became the CEO of OPPO together, seeking ventures and opportunities, Singapore in March 2014, and in order to fit as opposed to a dominant top-down huge in with the smartphone market in Singapore corporate structure. For example, a major which, like the Japanese market, has a strong Sean Deng Japanese company president in Indonesia is presence of mobile carriers, we made a very unlikely to have another business idea contract with the three biggest mobile carriers. We were able to grow and just do it while maintaining his position in his company, because our smartphone brand into the third best in Singapore in just three his company is an empire, under a parent-child company structure. years. In addition, I became the CEO of OPPO Japan in 2017, and We are more like a federation – business is constructed by common here I am. shareholders so there are no restrictions in venturing into new business. We see Southeast Asia in a situation similar to China Thoughts on Consumers 10-15 years ago. The business ideas can be duplicated to Southeast Asia. Whatever business model we choose or business venture we JS: In the light of your working experience in enter has to fulfill three criteria: the model is either tested in the Indonesia, how do you see the potential for your United States or China; the market size is humongous enough; and business in the Southeast Asian market? third, it is within our familiarized areas. People might ask, why would a company from the consumer electronics industry do cosmetics? Deng: We first entered Southeast Asia in 2013 with OPPO. Now we But if you peel off the surface, consumer electronics or cosmetics, have seven business groups in the region. In the consumer the core is actually similar, it is all about consumer business and electronics segment we have OPPO, Realme and iMall. In terms of involves human-intensive and capital-intensive business in nature. It the other sections we have YOU which is a cosmetic brand, and J&T all involves broadly the same steps, like product structuring Express which is the number one superpower in logistics in the identification, R&D, production, sales and marketing. So, things that 18 Japan SPOTLIGHT • May / June 2020 https://www.jef.or.jp/journal/ COVER STORY 4 we choose usually fall into similar patterns that we are familiar with. somewhat demanding, so Japan could be used as a testing market, would you agree? JS: What do you think about Japanese consumers? Are they different from Indonesian or Chinese Deng: I don’t think that is the case because the Japanese market is consumers? just too different. The user case in Japan cannot be replicated in other parts of the world; it is the other way around. If global players Deng: Japanese consumers are very unique. Mature. I think since want to do business in Japan they have to alter everything – how the bubble era, consumers are vastly more mature than before. So they manufacture, how they do R&D, how they talk to consumers. spending on consumption has diverged either into the very high end Japan is one isolated case, and is running another standard to other or the very low end, the basic end – the necessities. So, they are parts of the world. It is not globally scalable because of its mature, logical, and rational. Secondly, I think Japanese consumers uniqueness. People always use Singapore as a test phase because value the brands and products simultaneously. They see the you have the mix of Western and Eastern and a super easy business intangible and tangible values at the same time, and expect quality of environment to enter. The market size is small, so if you lose money product. The standards are higher than the rest of the world. So in it is limited. Japan is a very expensive market for a test phase. the rest of the world, most values of a product have been seen as something easy to fulfill. It has been considered a commodity. Your JS: How do you see the future of the digital industry water boilers and their water boilers – all boil water, but the quality overall? As well as economic, the social impact could and standards are different. Just like a phone. In the rest of the be enormous. world, you can guarantee that one year of service is enough. But in Japan sometimes it is seven years. Hardware is four or five years; Deng: It depends on how it all plays out. It could affect a lot of some other consumer products like routers that emit WiFi signals people’s jobs. require seven years of maintenance. These are completely different industrial standards in terms of quality assurance. The intangible JS: Some people are concerned about rising parts are the high levels of service. You have an utterly high level for unemployment and that AI could take some human the tangible parts, and an insane level for intangible parts. The jobs. However, some people say that with greater consumers want to receive all these values at the same time. learning about technology, we won’t have to worry about unemployment. Potential & Difficulty of Japanese Market Deng: Japan is very productive in its tradeable goods – the JS: We are curious about the future trend of automobiles, the robots, the upper stream components. The digitalization in Japan. We think that digital tradeable segments are very much productive. That leads to a high technologies may not necessarily have a good wage level in the non-tradeable goods. If we were to introduce AI and “chemistry” with the national culture of Japan. Would robotics to reduce the employment rate in the non-tradeable you concur? segment, the revenue will be the same but the bottom line will be down because we use AI and robots. Then, with all the savings, it Deng: Chinese and Southeast Asian populations are more adaptive depends on the government, how they want to circulate the money and ready to accept new things, while in Japan you still have a lot of back to the people who are unemployed. With digitalization we will things being done manually or on paper. I may not be the best see a huge boost in the non-tradeable goods segments such as person to comment on digitalization, but the businesses we are in services thanks to increasing efficiency and productivity. Whether are part of the bigger ecosystem of digitalization and in this that is good or bad depends on how this country wants to harvest ecosystem our hardware and products can boost the digitalization of that increased productivity to benefit people. some functions. JS: Do you see any difficulties or impediments to JS: Japan has long been trying to attract IT ventures, doing business in Japan? but it is difficult to attract volume of FDI to Japan because of the limited potential of digitalization here. Deng: Almost all the global players when they enter Japan face an However, as you mentioned Japanese consumers are enormous amount of barriers and difficulties. Simply because Japan Japan SPOTLIGHT • May / June 2020 19 COVER STORY 4 is running its own system and in order to adapt and survive in Japan support or recognition. Society in Japan is not so pro- it is a painful process to alter yourself – to reform and reshape so entrepreneurship in the way that the US or Israel is. that you are fitting the business needs. Japan is a very expensive country and consumers are paying the highest telephone bills in the JS: Why are Japanese reluctant when it comes to entire world, almost 100 times more than in India, and even entrepreneurship? Does it start with parents? compared with Western Europe, Japanese consumers are paying five to 10 times more than European consumers.

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